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Modern Labor Economics, 12e (Ehrenberg/Smith)

Chapter 5 Frictions in the Labor Market
1) A quasi-fixed cost of labor is a cost that

A) is expected to change over time.
B) is proportional to the number of hours worked.
C) is proportional to the number of workers hired.
D) is proportional to the amount of capital used.
Answer: C
Question Status: Old
2) Which of the following is definitely NOT a quasi-fixed cost of labor?

A) unemployment insurance
B) health insurance
C) overtime pay
D) vacation pay
1
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Answer: C
3) An increase in quasi-fixed costs would probably lead to a(n) ________ in the number of
employees hired and a(n) ________ in the number of overtime hours worked.
A) increase; decrease
B) increase; increase
C) decrease; decrease
D) decrease; increase
Answer: D
4) A mandated increase in overtime pay is likely to

A) cause employers to reduce overtime hours and convert them into added employment.
B) directly reduce the quasi-fixed costs per worker.
C) lead to a reduction in employment if higher costs cause a large scale effect.
D) lead to a reduction in employment if those who work overtime and those who are unemployed
are perfect substitutes.
Answer: C
5) A mandated increase in overtime pay is likely to

A) raise the average costs of labor, even if all overtime hours were eliminated.
B) cause an increase in labor hours due to the scale effect.
C) cause employers to increase straight-time hourly wages to compensate (because of the
"package" agreed upon).
D) cause an increase in labor hours due to the substitution effect.
Answer: A
2
6) Use of temporary-help agencies
A) increases employees' costs associated with searching for and applying for available temporary
openings.
B) increases the quasi-fixed costs of hiring temporary workers.
C) is more common when firms can build up inventories.
D) requires employers to pay more per hour than if they hired the worker directly.
Answer: D
7) Legislation requiring employer-provided health insurance for part-time workers would

probably ________ the employment of part-time workers and ________ the overtime of full-
time workers.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Answer: C
8) If a firm offers specific training to its workers, when the training is over,
A) workers will most likely be paid a wage that is equal to their marginal product.
B) workers will most likely be paid a wage that is greater than their marginal product, to
compensate for the training.
C) workers will most likely be paid a wage that is less than their marginal product.
D) workers will most likely be paid a wage that is less than their wage before training.
Answer: C
9) A reserve clause binds a professional athlete to a sports franchise even if the player does not
have a contract with the team that retains the rights to the player. In other words, the player can
only play for a single team and other teams may not bid for the player's services even in the
absence of a contract. Major League Baseball was forced to outlaw reserve clauses in 1975. As
a result of the ban, we would expect that
A) major league teams would have less incentive to train minor league players.
B) minor league players would be paid more.
C) players in the major leagues would be paid less than their marginal product.
D) players in the major leagues would be paid more than their marginal product.
Answer: A
Question Status: Revised
3
10) Workers with firm-specific training are ________ likely to be laid off than are workers with
general training because ________.
A) more; they are paid less than workers with general training
B) more; their wage is less than their marginal product
C) less; they are paid less than workers with general training
D) less; their wage is less than their marginal product
Answer: D
11) Employment protection policies adopted in many European countries tend to

A) increase job creation.
B) increase layoffs and increase job creation.
C) reduce layoffs and increase job creation.
D) reduce layoffs and reduce job creation.
Answer: D
Question Status: New
12) Policies that protect workers against "unjust dismissal" have been shown to cause
A) decreased employment levels and increased hour fluctuations.
B) increased employment levels and decreased hour fluctuations.
C) increased employment levels and increased hour fluctuations.
D) decreased employment levels and decreased hour fluctuations.
Answer: A
13) A profit-maximizing firm which wants to provide firm-specific training to its workers will
pay ________ in the training period and ________ after training is completed.
A) the market wage for single period jobs; the market wage for single period jobs
B) more than the market wage for single period jobs; more than the market wage for single
period jobs
C) less than the market wage for single period jobs; less than the post-training marginal revenue
product
D) more than the worker's marginal revenue product in other jobs; more than the worker's
marginal revenue product in other jobs
Answer: C
14) A profit-maximizing firm that wants to train its workers CANNOT

A) equate the marginal revenue product of labor to the value of expenditures on labor over time.
B) allow worker marginal revenue product in the post-training period to exceed the wage paid in
the post-training period.
C) allow the wage in the post-training period to be equal to or greater than the worker's post-
training marginal revenue product.
D) allow the cost of training to exceed worker marginal revenue product during the training
period.
Answer: C
4
15) Suppose that mobility costs incurred by workers are low. In this circumstance, the best way
to provide incentives for on-the-job training is for
A) employees to bear all of the costs of the investment.
B) employers and employees to share the costs of the investment.
C) employers to force workers to accept a below market wage during the training period.
D) employers to bear all of the costs of the investment.
Answer: B
16) General training is usually paid for by

A) the employer.
B) the employee.
C) both the employer and the employee.
D) neither the employer nor the employee.
Answer: B
17) Specific training is paid for by

A) the employer.
B) the employee.
C) both the employer and the employee.
D) neither the employer nor the employee.
Answer: C
18) If a worker incurs the entire cost of general training, and if mobility costs are low, then we
would expect that the employee's wage will be
A) equal to his or her marginal revenue product of labor.
B) greater than his or her marginal revenue product of labor, due to the training received.
C) less than his or her marginal revenue product of labor, to pay for the cost of the training
received.
D) either greater or less than his or her marginal revenue product of labor.
Answer: A
19) During a recession, average labor productivity tends to decrease because output falls and
A) prices also fall.
B) workers with specific training are not laid off.
C) workers with general training are not laid off.
D) neither workers with general training nor workers with firm-specific training are laid off.
Answer: B
5
20) A firm could profitably pay for a worker's general training if
A) the worker could change jobs easily.
B) the worker was nearing retirement.
C) the training program would also serve as a screening device.
D) the training increased the quasi-fixed costs of hiring the worker.
Answer: C
21) The use of an internal labor market implies that

A) workers in lower-level jobs will become less motivated and less dependable.
B) workers at the firm have no firm-specific training.
C) most upper-level jobs will be filled by promoting current workers.
D) the firm relies exclusively on credentials.
Answer: C
22) All else equal, a firm will prefer to hire a worker who will
A) stay at the firm for a long period of time.
B) stay at the firm for a short period of time.
C) be willing to work only a limited number of hours.
D) acquire firm-specific training from another firm.
Answer: A
23) Statistical discrimination is

A) using statistics to judge the average characteristics of a group of workers.
B) judging one person according to a group to which he or she belongs.
C) using statistics in hiring.
D) firing people due to low average productivity.
Answer: B
24) If workers share in the cost of training but also share in the productivity payoff from the
training, then we expect that
A) quit rates will be lower.
B) quit rates will be higher.
C) layoff rates will be higher.
D) employers would have no incentive to hire such workers in the first place.
Answer: A
6
25) Training costs
A) exclude opportunity costs of trainees' time.
B) arise mostly from out-of-classroom training.
C) exclude the opportunity cost of using capital equipment.
D) exclude opportunity costs of trainers' time.
Answer: B
26) A monopsony can hire one worker at a wage of $5, two workers at a wage of $6 each, three
workers at $7 each, and so on (each added worker adding one dollar to the wage rate). If the
marginal revenue product for all workers is $16, what wage will it pay?
A) $10
B) $11
C) $16
D) $17
Answer: A
27) When a firm hires a fourth worker, its wage rate goes from $80 a worker to $90. The
marginal revenue product of the fourth worker is $100. If the firm hires the fourth worker, its
profits
A) will increase by $10.
B) will increase by $20.
C) will decrease by $10.
D) will decrease by $20.
Answer: D
28) Initially, when a firm hires a fourth worker, its wage rate goes from $80 a worker to $90. The
marginal revenue product of the fourth worker is $100. Then the government imposes a
minimum wage of $90 a worker. If the firm now hires the fourth worker, its profits
A) will increase by $10.
B) will increase by $20.
C) will decrease by $10.
D) will decrease by $20.
Answer: B
7
29) The marginal product of a new worker is 80 units and the marginal expense of a new worker
is $800. The marginal product of hiring current workers another hour is 10 units and the
marginal expense of hiring current workers another hour is $12. If the firm needs extra hours of
work (assuming the work could be done by either the new or current workers), it should
A) hire new workers.
B) hire current workers more hours.
C) be indifferent between hiring new workers or hiring current workers more hours.
D) not hire anyone for the added hours of work.
Answer: A
30) Which of the following events will likely lead a firm to use overtime rather than hire new
workers?
A) The firm gets rid of its pension plan.
B) The firm starts to pay for health insurance.
C) The marginal productivity of all workers, new and current, increases 20%.
D) Both overtime and base pay increase 20%.
Answer: B
31) A firm employs 10 workers at a weekly wage of $500. If it employs an eleventh worker, it
has to raise all of its workers wage to $520. The eleventh worker adds $750 a week to revenues.
If the firm hires the eleventh worker, its weekly profits will
A) go up by $230.
B) go up by $30.
C) go up by $23.
D) go down by $270.
Answer: B
32) Two employers, A and B, pay the same wage but Employer A faces a more inelastic supply
curve of labor than Employer B. Both firms are monopsonies but have similar outputs and
technologies. Other things being the same, then in the long run
A) Employer A will employ less capital than Employer B.
B) Employer A will employ more capital than Employer B.
C) Both employers will employ the same amount of capital.
D) Both firms, in the long run, will pay a wage equal to their marginal revenue product.
Answer: B
8
33) Two employers pay a wage of $10 an hour. Employer A is a monopsony while Employer B
hires in a competitive labor market. Both firms sell their output in competitive markets. Which of
the following will be true?
A) The marginal worker in both firms will add the same to the firm's revenue.
B) If a worker left employer A and joined employer B, the economy would be better off.
C) Employer A has a higher average wage cost per worker than Employer B.
D) It will cost employer A more to hire another worker.
Answer: D
34) Members of certain groups have the right to sue employers if discriminated against. Other
things the same, then according to the model of quasi-fixed costs, this right will tend to
A) increase the wage rate of the group.
B) reduce the employment of the group.
C) increase the turnover rate of the group.
D) reduce the unemployment rate of the group.
Answer: B
35) Workers that are least susceptible to layoffs during a recession are ________ and those with
________.
A) the most skilled; the longest job tenure
B) the least skilled; the least job tenure
C) the most skilled; the least job tenure
D) the least skilled; the most job tenure
Answer: A
36) A firm is currently employing 10 workers. To hire an 11th worker, it must raise its weekly
pay by $5 and pay the 11th worker $100. What is the marginal expense of the hiring the 11th
worker?
A) $100
B) $150
C) $105
D) $5
Answer: B
9
37) Regardless of area of expertise, a public school pays all teachers the same annual wage. At
$70,000, it hires good teachers in all areas except science. Because science is a field in demand,
the school can only hire poor science teachers. It would have to pay science teachers $90,000 to
hire good science teachers. If one out of five teachers is a science teacher, what is the marginal
expense of getting a good science teacher instead of a poor one?
A) $90,000
B) $100,000
C) $20,000
D) $450,000
Answer: B
38) Most colleges pay teachers different salaries in different fields. For example, they usually
pay science teachers more than English teachers. Public schools pay teachers in different fields
the same. As a result, in public schools, if they want to get better science teachers, they have to
raise everyone's wage. Which of the following is a consequence of paying teachers different
salaries, as they do in colleges?
A) It raises the cost of hiring a higher quality of teachers.
B) It reduces the cost of getting good teachers in the areas that are in high demand.
C) It results in relatively fewer good teachers being hired in areas of high demand.
D) It results in most teachers getting similar pay.
Answer: B
39) A monopsony's marginal worker has a marginal revenue product of $12 an hour and a wage
of $8. A minimum wage of $10 will have which of these effects?
A) decrease the average hourly cost of a worker
B) decrease the marginal hourly cost of a worker
C) increase the marginal revenue product of the marginal worker
D) increase the firm's average profit per worker
Answer: B
40) What is meant by the term monopsony? Under what circumstances do monopsonistic
conditions arise in the labor market?
Answer: A monopsony is the sole buyer of labor services in a labor market. Classic examples of
monopsony are a single employer in an isolated geographic area such as a coal mine or a mill.
Monopsony can exist in occupations. For example, again assuming a relatively small town that
is somewhat geographically isolated, there may be a single school system that hires teachers or a
single hospital that employs nurses. Monopsonistic conditions exist when the labor supply curve
faced by an individual employer is upward sloping rather than perfectly elastic. The labor supply
curve slopes upward when workers aren't completely mobile and find it costly to change jobs.
10
41) Suppose that a monopsonist employs 100 workers at a wage of $15 per hour. Assume that
the monopsonist has maximized profit and that the marginal revenue product is $20 per hour at
the current employment level. Explain how imposition of a minimum wage in this setting could
increase employment at the firm. Illustrate your discussion with an appropriate graph. What is
the highest minimum wage that could be imposed without loss of employment? Explain and
illustrate graphically.
Answer: A minimum wage set above $15 per hour and below $20 per hour will lead to an
increase in employment. This is because such a minimum wage reduces the employer's marginal
expense of labor from its current value of $20 per hour. Given the reduction in MEL, MRP >
MEL at an employment level of 100 workers, giving the firm the incentive to employ additional
workers. The student should draw an appropriately labelled graph, such as Figure 5.3 in the
textbook, to illustrate the discussion. The highest minimum wage that can be imposed without
loss of employment is $20 per hour. Any minimum wage above $20 per hour would mean that
MRP < MEL at an employment level of 100 thus giving the firm incentive to reduce the number
of workers it employs.
42) Explain what is meant by the term quasi-fixed cost of employment. Give some examples of
quasi-fixed costs of employment.
Answer: A quasi-fixed cost of employment is a cost that is associated with the number of
workers employed rather than the number of hours that employees work. Variation in hours
worked causes change in hourly wage costs incurred but does not change the quasi-fixed costs of
employment. Examples of quasi-fixed costs of employment include hiring and training costs,
firing cost, unemployment insurance payroll-tax liability, pension contributions under defined
benefit plans, provision of medical and life insurance, and paid vacations.
43) Is an employer's unemployment insurance payroll-tax liability a quasi-fixed cost of

employment? Why or why not?
Answer: The unemployment insurance payroll-tax liability is a (small) percentage of an
employee's annual earnings, but the amount of annual earnings subject to the tax is capped at
$15,000 or less in a majority of states. Because most full time workers earn more than $15,000,
variation in hours worked generally has no effect on unemployment insurance payroll-tax
liability and therefore this cost is a quasi-fixed cost of employment.
11
44) A firm employs M workers per week and the length of the workweek at the firm is H hours.
Let MPM be the added output from an additional employee and let MPH be the added output
from a one hour increase in the workweek at the firm. MEM and MEH are, respectively, the
marginal expense of an added worker and of an added hour of work. At present, the cost of an
added unit of output produced by hiring more workers is $5 while the cost of an added unit of
output produced by employing existing workers for more hours is $3. Is the firm maximizing
profits given its current employment level and workweek? If your answer is yes, explain why. If
your answer is no, explain why not and discuss what adjustments the firm should make.
Answer: The firm is not maximizing profit given the figures cited in the question. The marginal
unit of output can be produced at lower cost using fewer workers working a longer workweek.
For example, if the last unit of output is produced via an appropriate increase in H and
appropriate reduction in M, the cost of production falls by $2 and profit increases
commensurately by $2. The firm should substitute increases in H for reductions in M to the
point where = . Reducing the employment level and increasing the length of the
workweek, while holding capital and output produced constant, will cause MPH to decrease and
MPM to increase via the law of diminishing marginal returns, thus driving the marginal expense
to marginal product ratios toward equality somewhere between $3 and $5 per unit. Once the
ratios are equalized, no further reduction in cost (and increase in profit) can be achieved by
adjustment of the employment level and length of the workweek.
45) What is the overtime pay premium? Discuss its origin and who it covers.
Answer: The Fair Labor Standards Act of 1938 established an overtime pay premium of 50% of
the wage rate (time and a half) for eligible workers working more than 40 hours per week.
Eligible workers are, generally speaking, non-supervisory and paid on an hourly basis.
46) Approximately what percentage of male skilled craft workers and technicians work regularly
scheduled overtime? Given the overtime pay premium, why would an employer have workers
work regularly scheduled overtime rather than simply hire more workers and thus avoid the
overtime pay premium?
Answer: The textbook cites a study showing that over 20% of male skilled craft workers and
technicians work more than 44 hours per week on a regular basis. Though employers must pay
time and a half for hours worked beyond 40 hours, they must find it less expensive than bearing
the quasi-fixed costs of employment that would be incurred were the production accomplished
by more workers working 40 hours per week. Empirical evidence supports this insight, in that
the production workers that are more likely to work overtime hours on a regular basis are those
for which hiring and training costs are higher, i.e., skilled craft workers as opposed to unskilled
workers.
12
47) Under what conditions would an employer invest in training its employees? Explain.
Answer: Training is an investment in that it imposes costs (both explicit and implicit) in the
present, but yields a flow of benefits (the increased productivity that results from the training) in
future periods. An employer will be willing to train a new worker if the training raises the
worker's marginal revenue product by a greater degree than it raises the worker's future wage rate
and if, once the training has occurred, the employer is able to retain the worker for a period
sufficient to allow the firm to recoup the cost of the training.
48) "An employer will not invest in general training for its employees." Agree or disagree with
the statement and justify your response.
Answer: General training is training that provides skills that are useful to many different
employers. In order for a firm to bear the cost of training, the firm must be able to pay a wage
below the worker's marginal revenue product in the post-training period in order to recoup the
cost of the investment. Generating this surplus may prove difficult when the training is general,
because employers that did not bear the training cost will be able to pay a wage commensurate
with the value of the worker's productivity. So the basic theory predicts that firms will not be
inclined to provide general training to workers.
On the other hand, if the labor market is characterized by monopsonistic conditions and workers
find it costly to change jobs, then the firm's incentive to provide general training is stronger.
Another possibility is that the combinations of general skills required by particular employers
vary across employers. Therefore, if a given firm provides a particular combination of general
skills to a given employee, that specific combination may only be of use at the firm that provided
the training despite the general nature of the training. A third possibility is that what appears to
be general training is actually an investment by the firm used to ascertain information regarding
the learning abilities, work habits, and motivation levels of new employees.
49) Discuss how the use of credentials in the hiring process can represent an efficient investment
by the firm.
Answer: Credentials are objective indicators of a new employee's potential productive
capability. Credentials are used in the hiring process as a means by which to deal with the
inherent asymmetric information problem confronting the employer. Examples of credentials are
diplomas, certifications, letters of reference, and so on. They represent a lower cost means by
which to judge a worker's potential. Without use of credentials in the hiring process, an
employer might have to incur significant expense in order to identify workers with the skills and
abilities necessary to perform effectively in the position for which they are being considered.
Use of credentials in the hiring process is efficient in the sense that such use generally serves to
reduce hiring and training costs for the firm.
13
50) What is an internal labor market? What types of firms are most likely to rely on an internal
labor market? Explain.
Answer: An internal labor market is a means by which firms deal with asymmetric information
regarding potential new employees. Personal characteristics such as innate ability, motivation,
dependability, ability to work well with others, and so on are difficult to judge in the hiring
process. The presence or absence of such characteristics and qualities may only be revealed in
due time once the individual is employed. An internal labor market admits new workers into
low-level jobs. Workers that demonstrate the desired qualities and characteristics are
subsequently able to advance to positions with greater pay and responsibilities within the firm.
With an internal labor market, the firm commits to promoting from within. Workers that don't
meet expectations may be let go after a probationary period.
Firms most likely to rely on an internal labor market are those whose upper-level workers must
have a lot of firm specific knowledge. Such firm-specific knowledge is achieved by on the job
learning over a period of years. An internal labor market fosters long term commitment on the
part of employees to the firm, which is necessary in an environment where the firm makes
significant investment in a worker's firm-specific skills.
14
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especially the older and larger roots. Reputed to cure anything from
a cough to a boil to an internal disorder, it was also considered an
aphrodisiac and a source of rare, mystical properties. But scientific
research has never yielded any hard evidence of its medicinal worth.
Settlers used ginseng sparingly, for it brought a high price when sold
to herb-dealers for shipment to China. The main problem lay in
locating the five-leaved plants, which grew in the most secluded,
damp coves of the Smokies. Sometimes several members of a
family would wait until summer or early fall, then go out on extended
“sanging” expeditions.
The search was not easy. During some seasons, the plant might not
appear at all. When it did, its leaves yellowed and its berries
reddened for only a few days. But when a healthy “sang” plant was
finally found, and its long root carefully cleaned and dried, it could
yield great financial reward. Although the 5-year-old white root was
more common, a red-rooted plant needed a full decade to mature
and was therefore especially prized. Greed often led to wanton
destruction of the beds, with no seed-plants for future harvests.
Ginseng was almost impossible to cultivate.
Ginseng-hunting became a dangerous business. Although Daniel
Boone dug it and traded in it, later gatherers were sometimes killed
over it. One large Philadelphia dealer who came into Cataloochee in
the mid-1800s was murdered and robbed. Anyone trying to grow it,
even if he were successful, found that he would have to guard the
plants like water in a desert. Indeed, the rare, graceful ginseng
became a symbol for many in the mountains of all that was unique,
so readily destroyed, and eventually irreplaceable.
As much as the pioneers drew on Indian experience, they also
depended on their own resourcefulness. One skill which the early
settlers brought with them into the Smoky Mountains involved a
power unknown to the Cherokees. This was the power of the rifle:
both its manufacture and the knowledge of what the rifle could do.
The backwoods rifle was a product of the early American frontier.
Formally known as the “Pennsylvania-Kentucky” rifle, this long-
barreled innovation became a standby throughout the Appalachians.
To assure precise
workmanship, it was
made out of the
softest iron
available. The inside
of the barrel, or the
bore, was
painstakingly “rifled”
with spiralling
grooves. This
gradual twist made
the bullet fly harder
and aim straighter
toward its target.
The butt of the
weapon was
crescent-shaped to
keep the gun from
slipping. All shiny or
highly visible metal
was blackened, and
sometimes a
frontiersman would
rub his gun barrel
with a dulling stain or
crushed leaf.
But the trademark of
the “long rifle” was
Alan Rinehart just that: its length.
Weighing over 2.5
Aunt Sophie Campbell made clay kilograms (5.5
pipes at her place on Crockett pounds) and
Mountain and sold them to her measuring more
neighbors and to other folks in the than 1.2 meters (4
Gatlinburg area. feet), the barrel of
the backwoods rifle
could be unbalancing. Yet this drawback seemed minor compared to
the superior accuracy of the new gun. The heavy barrel could take a
much heavier powder charge than the lighter barrels, and this in turn
could, as an expert noted, “drive the bullet faster, lower the
trajectory, make the ball strike harder, and cause it to flatten out
more on impact. It does not cause inaccurate flight....”
The Pennsylvania-Kentucky rifle became defender, gatherer of food,
companion for thousands of husbands and fathers. Cradled on a
rack of whittled wooden pegs or a buck’s antlers, the “rifle-gun” hung
over the door or along the wall or above the “fire-board,” as the
mantel was called, within easy and ready reach. It was the
recognized symbol of the fact that each man’s cabin was his castle.
Equipped with a weapon such as this, pioneer Americans pushed
back the frontier. The fastnesses of the Great Smoky Mountains
gradually submitted to the probing and settling of the white man. The
fertile valleys were settled, the hidden coves were conquered. The
Oconaluftee Turnpike to the top of the Smokies was completed in
1839. And in that fateful year, disaster was stalking a people who
had known the high mountains but who had not known of the ways
of making a rifle.
Rifle Making
National Park Service

Charles S. Grossman
Of all the special tasks in the Great Smoky Mountains, rifle making
was perhaps the most intricate and the most intriguing. From the
forging of the barrel to the filing of the double trigger and the carving
of the stock, the construction of the “long rifle” proved to be a
process both painstaking and exciting. After the barrel was shaped
on the anvil, its bore was cleaned to a glass-like finish by inserting
and turning an iron rod with steel cutters. When the rod could cut no
more, the shavings from the bore were removed. The rifling of the
barrel, or cutting the necessary twists into the bore, required a 3-
meters-long (10-foot) assembly, complete with barrel, cutting rod,
and rifling guide. The 1.5-meter (5-foot) wooden guide, whose
parallel twists had been carefully cut into it with a knife, could be
turned by a man pushing it through the spiral-edged hole of a
stationary “head block.” The resulting force and spin drove the
cutting rod and its tiny saw into the barrel, guiding its movement as it
“rifled” the gun.
Most of the rifles in the Smokies had an average spin or twist of
about one turn in 122 centimeters (48 inches), the ordinary original
length of the barrel. A later step—“dressing out” the barrel with a
greased hickory stick and a finishing saw—usually took a day and a
half to be done right. Likewise, the making of a maple or walnut rifle
stock, or the forging of the bullet mold, led gunsmiths to adopt the
long view of time and the passing of days in the Great Smoky
Mountains. Two such gunsmiths were Matt Ownby and Wiley
Gibson. Ownby (far left) fits a barrel to an unfinished stock as the
process of rifle making nears its end. Gibson (below), the last of four
generations of famous Smoky Mountain gunsmiths, works at his
forge in Sevier County, Tennessee. Over the years Gibson lived in
several places in Sevier County, and in each one he set up a gun
shop. As he tested one of his finished products (left), Gibson
commented: “I can knock a squirrel pine blank out of a tree at 60
yards.”
Walini was among the Cherokees living on the Qualla
Reservation in North Carolina when James Mooney
visited in 1888.
Smithsonian Institution
A Band of Cherokees Holds On
The Cherokees who remained in the East endured many changes in
the early 1800s.
As their Nation dwindled in size to cover only portions of Georgia,
Alabama, North Carolina, and Tennessee, the influence of growing
white settlements began to encroach on the old ways, the accepted
beliefs. Settlers intermarried with Indians. Aspects of the Nation’s
civilization gradually grew to resemble that of the surrounding states.
The Cherokees diversified and improved their agricultural economy.
They came to rely more heavily on livestock. Herds of sheep, goats,
and hogs, as well as cattle, grazed throughout the Nation. Along with
crops of aromatic tobacco, and such staples as squash, potatoes,
beans, and the ever-present corn, the Cherokees were cultivating
cotton, grains, indigo, and other trade items. Boats carried tons of
export to New Orleans and other river cities. Home industry, such as
spinning and weaving, multiplied; local merchants thrived.
Church missions and their attendant schools were established. As
early as 1801, members of the Society of United Brethren set up a
station of missionaries at a north Georgia site called Spring Place.
And within five years, the Rev. Gideon Blackburn from East
Tennessee persuaded his Presbyterians to subsidize two schools.
In 1817, perhaps the most famous of all the Cherokee missions was
opened on Chickamauga Creek at Brainerd, just across the
Tennessee line from Georgia. Founded by Cyrus Kingsbury and a
combined Congregational-Presbyterian board, Brainerd Mission
educated many Cherokee leaders, including Elias Boudinot and
John Ridge. Samuel Austin Worcester, a prominent Congregational
minister from New England, taught at Brainerd from 1825 until 1834.
He became a great friend of the Cherokees and was referred to as
“The Messenger.”
In 1821, a single individual gave to his Nation an educational
innovation as significant and far-reaching as the influx of schools. A
Cherokee named Sequoyah, known among whites as George Gist,
had long been interested in the “talking leaves” of the white man.
After years of thought, study, and hard work, he devised an 86-
character Cherokee alphabet. Born about 1760 near old Fort
Loudoun, Tennessee, Sequoyah had neither attended school nor
learned English. By 1818, he had moved to Willstown in what is now
eastern Alabama and had grown interested in the white man’s ability
to write. He determined that he would give his own people the same
advantage.
The first painstaking process he tried called for attaching a mark to
each Cherokee word. These marks soon mounted into the
thousands. As he sensed the futility of this one-for-one relationship,
he examined English letters in an old newspaper. His own mind
linked symbols of this sort with basic sounds of the Cherokee
tongue. After months of work, he sorted out these sounds and
assigned them symbols based, to a large extent, upon the ones he
had seen in the newspaper. When he introduced his invention to his
fellow Cherokees, it was as if he had loosed a floodgate. Within the
space of a few weeks, elders and children alike began to read and
write. The change was incredible.
Sequoyah himself vaulted into a position of great respect inside the
Nation. One of his many awestruck visitors, John Howard Payne,
described him with the finest detail and noted that Sequoyah wore
“... a turban of roses and posies upon a white ground girding his
venerable grey hairs, a long dark blue robe, bordered around the
lower edge and the cuffs, with black; a blue and white minutely
checked calico tunic under it, confined with an Indian beaded belt,
which sustained a large wooden handled knife, in a rough leathern
sheath; the tunic open on the breast and its collar apart, with a
twisted handkerchief flung around his neck and gathered within the
bosom of the tunic. He wore plain buckskin leggings; and one of a
deeper chocolate hue than the other. His moccasins were
unornamented buckskin. He had a long dusky white bag of sumac
with him, and a long Indian pipe, and smoked incessantly,
replenishing his pipe
from his bag. His air
was altogether what
we picture to
ourselves of an old
Greek philosopher.
He talked and
gesticulated very
gracefully; his voice
alternately swelling,
and then sinking to a
whisper, and his eye
firing up and then its
wild flashes
subsiding into a
gentle and most
benignant smile.”
During the 1820s,
Sequoyah moved
west to Arkansas.
Preoccupied with the
legend of a lost band
of Cherokees
somewhere in the
Rocky Mountains,
he initiated several
attempts to discover
the group. But age
Smithsonian Institution caught up with him.
He died alone in
Sequoyah displays the Cherokee northern Mexico in
alphabet he developed. the summer of 1843.
He had brought his
Nation a long way. His name would be immortalized in the great
redwood tree of the Far West, the giant sequoia. And in a sense his
spirit lived on in the first Cherokee newspaper—the Cherokee
Phoenix—which was established in 1828 at New Echota, with Elias
Boudinot as its editor and Samuel Worcester as its business
manager.
The Cherokees also made remarkable changes in government. In
1808, they adopted a written legal code; a dozen years later, they
divided the Nation into judicial districts and designated judges. The
first Supreme Court of the Cherokees was established in 1822, and
by 1827 the Nation had drawn up an American-based Constitution.
The president of the constitutional convention was a 37-year-old
leader named John Ross. A year later, he began a 40-year term as
principal chief of his people.
But whatever the progress of the internal affairs of the Cherokee
Nation, political relations with the United States steadily
disintegrated. Although the first quarter of the 19th century saw a
sympathetic man, Return Jonathan Meigs, serve as America’s
southern Indian agent, even he and his position could not prevent
the relentless pursuit of Indian territory.
In 1802 and 1803, the U.S. Government set a dangerous precedent
for the Cherokees. In return for Georgia’s abandonment of her
claims to the Mississippi Territory, the United States agreed to
extinguish all Indian titles for lands lying within Georgia. This
indicated that the government was no longer prepared to defend the
Cherokee Nation.
President Thomas Jefferson acted to alleviate some of the Cherokee
loss. He suggested a program of removal west to a portion of the
newly acquired Louisiana Purchase. Most Cherokees hated the plan,
yet some harassed bands made the trip to what is now Arkansas.
The foot was in the door; hereafter, the government could point to a
few Cherokees in Arkansas and direct others there. Even though 800
eastern Cherokee warriors fought alongside Americans during the
War of 1812, the United States came to recognize only the
government of the Cherokees West.
But what of the Cherokees East? They waited. They pursued daily
routines while the pressures around them gathered and grew. And
by 1828, these pressures had reached a degree which showed the
Cherokees that the final crush was on.
It began
inside the
Nation. In the
winter of
1828, an old
Cherokee
councilman,
Whitepath,
rose up in
rebellion
against the
new
constitution.
Suspicious of
the Nation’s
whirlwind
progress,
fearful of the
Nation’s
stormy
enemies,
Whitepath
attempted to
persuade his
15,000
countrymen
to hold fast
to the ways
of the past.
He Smithsonian Institution
assembled a Students stand before the original school
series of building at Dwight Mission, the first
localized Cherokee mission west of the Mississippi
meetings, River. The one-room log schoolhouse is
where he very much like those the white settlers
advocated built and used for years in the Smokies.
the
abandonment of
white religion,
society, economy.
He called for a
return to tribal
organization, but his
call fell on younger
ears and his plan
was doomed to
failure.
The Cherokees
turned to John Ross
for leadership. Like
Sequoyah, John
Ross possessed
both grace and
ability. These
assets, combined
with courage,
enabled him to
accomplish
seemingly remote
goals for his people.
This handsome
statesman,
educated by his
own father,
represented the
Smithsonian Institution middle ground of
Cherokee policy.
Elias Boudinot (top), editor of the Though refusing the
Cherokee Phoenix, bowed to reactionism of a
pressure and joined those willing to Whitepath, John
move west. Ross also rejected
any proposal to
move west. For he knew that his people had lived here in the
Smokies and belonged here, and he would not have them forced
from their
homeland.
Andrew Jackson
would. This stern
Tennessee soldier
and politician began
his career as a
headlong Indian
fighter and never
lost the zeal.
Although Jackson
the soldier had been
aided numerous
times by Cherokee
warriors, Jackson
the politician was
determined to move
the Cherokees
west. And in the
watershed years of
1828 and 1829,
Andrew Jackson
was elected and
sworn in as
President of the
United States.
Events conspired
against the Nation.
Smithsonian Institution In July of 1829, in
John Ross remained firm in his what is now known
opposition to the removal of the as Lumpkin County,
Cherokees. He was in the last group Georgia, a few
to leave. shiny nuggets of
gold were
discovered on
Ward’s Creek of the Chestatee River. Within days, fortune hunters
swarmed into the territory; more than 10,000 gold-seekers squatted
on Cherokee lands, disregarded Cherokee rights, and pillaged
Cherokee homes. With Jackson’s support, the Georgia legislature
passed laws confiscating Indian land, nullifying Indian law, and
prohibiting Indian assembly. By the end of 1829, the script for
Cherokee removal had been blazoned in gold.
But there was more. Andrew Jackson asked Congress for “a general
removal law” that would give him prime authority in the matter at the
same time that it formed the basis for future treaty negotiation.
Congress passed the Removal Act, which included a half-million
dollar appropriation for that purpose, in May of 1830. Davy Crockett,
whose legendary exploits and down-to-earth compassion made him
perhaps the best representative of the mountain spirit, was a U.S.
congressman at the time. Although his grandfather had been
murdered by Dragging Canoe, Davy Crockett argued against and
voted against the bill. He was the only Tennessean to do so, and he
was defeated when he ran for reelection.
Cherokee leaders sought help from the U.S. courts. Their friend and
missionary, sober and troubled Samuel Worcester, fell victim to a
Georgia law “prohibiting the unauthorized residence of white men
within the Cherokee Nation.” Worcester appealed to the Supreme
Court, which in February of 1832 considered the case of Worcester
v. Georgia. On March 3, a feeble Chief Justice John Marshall read
the Court’s decision to a packed room: all the Georgia laws against
the Cherokee Nation were declared unconstitutional.
Elias Boudinot, editor of the Phoenix and a special friend of
Worcester, wrote to his brother and expressed the Nation’s joy and
relief:
“It is glorious news. The laws of the state are declared by the highest
judicial tribunal in the country to be null and void. It is a great triumph
on the part of the Cherokees.... The question is forever settled as to
who is right and who is wrong.”
Yet Andrew Jackson would not stand for such a settlement. “John
Marshall has made his decision,” Jackson thundered, “now let him
enforce it.” This was the single instance in American history where
the President so
bluntly and openly
defied a Supreme
Court ruling. The
situation grew more
bleak. Worcester
was released from
jail only after
appealing to the
“good will” of the
state of Georgia.
Matters worsened
as Georgia
conducted its
Cherokee Lottery of
1832, and
thousands of white
men descended
onto lots carved out
of the Cherokee
land.
Boudinot and
several other
Cherokee leaders,
including John
Ridge, grew
discouraged to the
point of resignation.
Jackson’s attitude Smithsonian Institution
as President,
coupled with Major Ridge signed a treaty ceding
Georgia’s all of the Cherokees’ land in the east
unrelenting attack to the United States. He, his son
and the Supreme John, and his nephew Elias
Court’s inability to Boudinot were “executed” on June
stop it, caused a 22, 1839.
change of heart in
Boudinot and Ridge. Boudinot stepped down from the Phoenix and,
with Major Ridge, became an important spokesman for a minority
faction of Cherokees which was prepared to move west. However,
John Ross continued to speak for the vast majority who rejected any
discussion of removal.
By 1835, the rift between the Ridge party and John Ross’ followers
had become open and intense. Seeking to take advantage of this
division, Jackson appointed a New York minister, J.F. Schermerhorn,
to deal with Boudinot and Ridge. The Cherokee supporters of Ross
hated this “loose Dutch Presbyterian minister” and referred to him as
“The Devil’s Horn.”
On several occasions, Ross attempted to negotiate a reasonable
solution with Washington. He was frustrated at every turn. In
November of 1835, he and the visiting John Howard Payne were
arrested by the Georgia militia. In jail, Payne heard a Georgia guard
singing “Home Sweet Home” outside his cell. Payne asked the man
if he knew that his prisoner had written the song; the guard seemed
unimpressed. After spending nine days in jail, Ross and Payne were
released without any explanation for their treatment.
Ross traveled on to Washington to resume negotiations. While he
was there, Schermerhorn and the Ridge party drew up and signed a
treaty. Endorsed by a scant one-tenth of the Nation’s 16,000
Cherokees, this treaty ceded to the United States all eastern territory
in exchange for $5 million and a comparable amount of western
land. Cherokees throughout the Nation registered shock and
betrayal; Boudinot and Ridge, their lives already threatened
numerous times, would be murdered within four years. Yet despite
Ross’ protestations of fraud, the U.S. Senate ratified the minority
Treaty of New Echota by one vote. A new President, Martin Van
Buren, authorized Gen. Winfield Scott to begin the removal of all
Cherokees in the summer of 1838.
Scott, while determined to carry out the removal, tried in vain to
restrain his troops from inflicting undue hardships. Scott’s soldiers
moved relentlessly through the Nation. As one private remembered it
in later years:
“Men working in the
fields were arrested
and driven to the
stockades. Women
were dragged from
their homes by
soldiers whose
language they could
not understand.
Children were often
separated from their
parents and driven
into the stockades
with the sky for a
blanket and earth
for a pillow.”
The soldiers built 13
stockades in North
Carolina, Georgia,
Tennessee, and
Alabama. Using
these as base
camps, they
scattered
throughout the
countryside with
loaded rifles and
fixed bayonets. As
they herded Indians Smithsonian Institution
back toward the
forts, bands of Ginatiyun tihi, or Stephen Tehee,
roving outlaws was born in Georgia six months
burned the homes, before the removal of the
stole the livestock, Cherokees to the West. He served
robbed the graves. as a tribal delegate to Washington
Throughout the in 1898.
summer, a stifling

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Modern Labor Economics, 12e (Ehrenberg/Smith)

1) A quasi-fixed cost of labor is a cost that

2) Which of the following is definitely NOT a quasi-fixed cost of labor?

4) A mandated increase in overtime pay is likely to

5) A mandated increase in overtime pay is likely to

7) Legislation requiring employer-provided health insurance for part-time workers would

11) Employment protection policies adopted in many European countries tend to

14) A profit-maximizing firm that wants to train its workers CANNOT

16) General training is usually paid for by

17) Specific training is paid for by

21) The use of an internal labor market implies that

23) Statistical discrimination is

43) Is an employer's unemployment insurance payroll-tax liability a quasi-fixed cost of

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